To open long positions on EUR/USD, you need:

Several signals to enter the market were formed yesterday. Let's take a look at the 5 minute chart and break down all the entry points.

In the first half of the day, the emphasis was placed on the level of 1.2187. It is clearly visible how the bears tried and failed to settle below this range, which leads to forming a signal to open long positions. The pair did not rapidly rise, and the buy signal was confirmed only after testing the level of 1.2187 from the top down. The upward movement was about 20 points and then it ended, and the bulls failed to get to the important resistance of 1.2217.

In the second half of the day, the pressure on the euro immediately increased and the support at 1.2179 was broken. The reverse test of this level from bottom to top did not take place, so I missed the entry point. There was no activity in the support area of 1.2155, where I advised buying on a rebound. The bulls did not show much interest in the euro in the 1.2134 area, however, a rebound to the upside by 15 points still took place.

The bulls must protect the support at 1.2105, to which the pair is now gradually sliding down. Forming a false breakout there in the first half of the day will help stop the bearish trend, which will lead to an upward correction to the resistance area of 1.2134, on which a lot depends on today. A breakthrough and consolidation on this range with a test from top to bottom creates an additional entry point to long positions, which will open a direct road to the resistance area of 1.2157, where I recommend taking profits. Moving averages that play on the side of the bears are also found there. Considering that there are no important fundamental statistics in the morning, the focus will shift to the speech of European Central Bank President Christine Lagarde. Lagarde alone, as we already know, takes a conservative approach to the bond buying program, so her statements are unlikely to provide much help to the euro. The whole emphasis will be on the afternoon and on the report on the number of people employed in the US nonfarm sector and the unemployment rate. Lack of bullish activity in the area of 1.2105 may lead to a succeeding decline in the euro. In this case, it is best to postpone long positions to the level of 1.2073, from which you can buy the pair also only if a false breakout is formed. Long positions immediately on a rebound can only be opened from the low of 1.2023 with the expectation of a small rebound of 10-15 points within the day against the trend.

To open short positions on EUR/USD, you need:

The bears will fight to continue the downward trend that they have been controlling for two days consecutive days now. The initial challenge is to protect the resistance at 1.2134. Forming a false breakout there creates a new signal to sell EUR/USD, counting on a further decline from the pair. The absence in Lagarde's speech of any hints about curtailing the program of buying bonds will further weaken the position of the euro, which will lead to a decline to the support area of 1.2105, which is now the focus. A breakthrough and a test of this range from the bottom up creates an additional entry point to short positions with the expectation of an exit to the low of 1.2073, where I recommend taking profits. The next target will be support at 1.2023, but EUR/USD can reach it only if we receive a very strong report on the US labor market. If the bears are not active in the area of 1.2134, I recommend postponing short positions until the resistance of 1.2157 is updated, but you can also open short positions there only if a false breakout is formed. I recommend selling EUR/USD immediately on a rebound only from a large high of 1.2183, counting on a downward correction of 15-20 points within the day. The next major resistance is only at a new local high around 1.2213.

The Commitment of Traders (COT) report for May 25 revealed that long positions increased while short ones decreased, which indicates a growth in demand for the European currency before the start of the last month of the second quarter of this year. It is expected that the European economy will show particularly strong growth in the summer, which will lead to a new growth for the euro in the area of annual highs. Data on the growth rate of the US economy in the first quarter of 2021 did not particularly surprise traders last week, which caused the dollar to remain under pressure. Any strong movements of the EUR/USD pair are now perceived by traders as a good opportunity to gain long positions in continuation of the bull market. Apparently, only the news that the Federal Reserve is seriously going to reduce the volume of bond purchases can lead to a serious increase in the US dollar, but we will know about this only by mid-June. Up to this point, every time the pair declines, the demand for risky assets will return. The COT report shows that long non-commercial positions jumped from 232,330 to 236,103, while short non-commercial positions fell from 132,472 to 132,103. This indicates an influx of new buyers in hopes of continued growth of the euro, and a wait-and-see attitude on the bears' part. The bulls accumulate long positions given the fact that the pair has been standing at local highs for quite a long time, but the bears are gradually getting rid of the euro. This indicates a possible breakdown of monthly highs in the near future and the continuation of the euro's growth. The total non-commercial net position increased from 99,858 to 104,000. The weekly closing price also increased from 1.21564 to 1.22142.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates a continuation of the bear market.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

In case of growth, the upper border of the indicator in the area of 1.2183 will act as a resistance. The pair may be supported by the lower border of the indicator in the area of 1.2080.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.